Why Malaysia is not in trouble

KUALA LUMPUR - Malaysia is better prepared to manage another global financial crisis due to its sound economic and financial structure as well as the availability of a strong surveillance mechanism, according to Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz.

"Reforms that we have implemented since the 1997/98 Asian Financial Crisis have improved the resilience of our financial system tremendously so much so that we are now better able to manage any global financial market volatility," Zeti told reporters during a press briefing in conjunction with the release of Bank Negara's 2013 annual report.

"Whether we will have another financial crisis or not is beyond our control," Zeti said, adding that the country would be better able to manage risks should another financial crisis occur.

She said conditions for the financial system had improved while the global economy was on a steady recovery path.

"This recovery is going to be modest and it will happen very gradually over a number of years," Zeti said, adding that the global economy and financial system remained vulnerable to setbacks that could undermine its recovery process.

"But I believe the recent global financial crisis that happened in 2007/08 has put forth many lessons that we can learn ," Zeti said in response to a question on whether Malaysia was prepared for another financial crisis.

Recently, former Prime Minister Tun Dr Mahathir Mohamad had said that Malaysia should be prepared for another financial crisis.

Towards this end, Zeti outlined reforms in five key areas that have played a part in strengthening the country's economy.

"First, our economic structure has changed. It is now more balanced, as domestic demand has become the driver of growth. If there are major economic contractions due to global developments as we have seen in recent years, our growth would be modest, but we could stay on a steady growth path," she said.